Oil stocks at major support levels

S&P 500 STRATEGY: STAND ASIDE (for definitions of terms see end of report)

It was a wild and woolly week for the S&P 500. We plunged to new lows for the move, getting to our next major level of support at 1,200, then staged a dramatic rebound on what was probably massive short covering and closed up on the week at 1,260. The reversal was dramatic but it was not an outside reversal week.

The rebound occurred when it became clear that the US government would bail out Fannie and Freddie. The two mortgage giants were clearly “too big to fail”. With the US now in effect
assuming their combined $5.6 trillion in debt, there is some concern about the health of US debt
and whether there could be a downgrade from AAA. That would be earth-shattering. But when
one considers the massive size of the US debt, the massive and growing trade deficit and current account deficit, plus the huge under-funding of Medicare and Social Security, you have a looming crisis not just for the financial system but for the entire US. [read more…]

TSX INDICES

Another bad week for the TSX Composite as it fell for the 6th week in a row. If 7 is lucky we may get an up week this coming week. Still we lost 1.4 per cent and the decline was led by energy, golds and materials.

The Energy sector dominates the TSX. Many other sub indices put in new lows for the move (Financials, Real Estate, Consumer Discretionary, Healthcare and Info Tech) then closed up on the week making it a reversal week. SO is this the end of the bear move for these markets and the start of a bear move for the energy, golds and materials? We doubt it but it may signal a temporary low for the beat up sectors. We certainly wouldn’t be chasing those sectors except for a trading position. Just be wary that the moves could be fast and swift and then quickly return to new lows. So it will be important to be nimble. [read more…]